Omron 2010 Annual Report Download - page 27

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Feature “Omron in China” China, Our Driving Force for Growth
Creating a Manufacturing and Sales
Network with a Hub in Shanghai
The Omron Group located its China headquarters in
Shanghai, in the heart of the Chinese economy, from
where it controls all of its affiliated companies in the
Greater China region. The Company has also set up
major bases centering on the three coastal growth
areas. In Shanghai, the Company operates OMS, a
core global development and production base, and
sales companies for control equipment, trading com-
panies and associated manufacturing companies for
electronic components, and the Omron Shanghai R&D
Collaborative Innovation Center.
The Company maintains an electronic components
manufacturing and sales company in the city of Shen-
zhen. Omron established a company to manufacture
automotive electronic components in Guangzhou, and
plans to expand its presence in regions where the auto-
mobile industry is concentrating its manufacturing
activities. The Company also operates companies that
manufacture and sell backlights for small and medium-
size liquid-crystal devices, acquired through M&As in
fiscal 2006, in the cities of Suzhou and Dongguan.
Business processes related to healthcare equip-
ment are concentrated in the city of Dalian, where the
Company established a manufacturing, development,
and trading hub focusing on its core blood pressure
monitor products. The Company also expanded sales
channel networks throughout China for the industrial
automation business, electronic components busi-
ness, and healthcare business.
40% of All Omron Employees are Chinese
Including these major bases, the Omron Group cur-
rently maintains 27 subsidiary and affiliated companies
in China. The Group currently has approximately 13,000
employees of Chinese nationality, which surpasses
the roughly 12,000 Japanese employees, and repre-
sents roughly 40% of Omron’s workforce.
Incalculable Growth Potential
While countries around the world were mired in reces-
sion after the Lehman shock, the Chinese government
promptly implemented a four trillion yuan (approxi-
mately ¥52 trillion) large-scale economic stimulus
package that sparked 9.1% economic growth for the
country in 2009. Moreover, government measures
designed to stimulate consumer activity brought out
the latent and built-up consumer willingness to spend,
producing the growing impression that China, while
remaining the “world’s factory,” is transforming into
the “world’s biggest consumer market.”
At the same time, China’s GDP per capita is just
one-tenth the level in Japan, and its GDP for primary
industries and electric power consumption per capita
are equivalent to the levels in Japan 40 years ago.
China’s growth capacity is still incalculable.
Moving Inland from the Coasts
The Chinese government has been focusing on pro-
moting urbanization and industrialization and developing
its export industry at its three coastal growth areas cen-
tered on Beijing, the Yangtze River Delta, and the Pearl
River Delta. However, the government is fully aware
that raising the economic base of its inland regions will
also be essential to ensure sustained growth of the
Chinese economy. For that reason, development of
the inland economies is a prime target of the four trillion
yuan stimulus package.
Regarding the inland regions, the bottleneck for eco-
nomic development has been the cost and time required
to transport people and goods across the vast distances.
The low income levels have also limited the attractive-
ness of the regions as consumer markets. These
obstacles are already being addressed with the expan-
sion of expressways as well as plans for high-speed
railways into the internal areas. The establishment of
such infrastructure will undoubtedly lead to an economic
transformation emanating from the major urban centers
and surrounding areas in the inland region, which is
home to some 800 million people.
Local Companies Expanding Facilities
The Chinese government’s efforts to generate economic
growth driven by domestic demand are being fueled by
investment in the public sector and purchase subsi-
dies for replacement of consumer electronics and
automobiles. The consumption stimulus measures are
A Very Attractive
Growth Market for Omron